Subprime consumers are a growing segment of the automotive finance market, according to the latest data.

As of the fourth quarter, subprime borrowers made up 15% of all U.S. vehicle financing, its biggest share for that quarter since 2021, credit reporting agency Experian said.

“As affordability remains top of mind, both lenders and consumers are adapting, reflecting broader trends in credit patterns and vehicle financing behavior,” said head of the company’s automotive insights, Melinda Zabritski.

The subprime share was up 5% quarter-over-quarter, according to Experian. For new-vehicle financing, it increased by 14% to nearly 7%, while subprime used-vehicle borrowing grew by about 2% to about 22½%.

Prime new-vehicle borrowers, meanwhile, fell 3% in the quarter and by 2% for used-vehicle transactions, Experian said.

Not surprisingly, the average new-vehicle loan amount was up in the quarter, surging 4% to $43,582. The average monthly payment jumped 3% to $767, according to Experian. 

On the used-vehicle side, the average loan total rose 3% to $27,528, and the average monthly payment was up about 2% to $537.

Interest rate fell in the quarter by about half a percentage point for new-vehicle financing to 6.37% and by 3% for used to 11.26%. 

Despite that slight relief, longer loan terms continued to increase. The percentage of new-vehicle loans of 73 to 84 months rose to nearly 30% and for used loans to about 29%, Experian said. Those longer than 85 months also climbed, to 2% for new vehicles and 1% for used.

“Consumers and lenders are finding ways, such as extending loan terms, to make the financing fall within a budget,” Zabritski said. “It will be important to monitor how some of the trends evolve over the next 12-18 months.”

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